Performance-Based Education Funding Pursued by Michigan Business Leaders

Business leaders and policy makers in Michigan are advocating for performance-based education funding (PBF) for higher education.

In a February press release, Business Leaders for Michigan (BLM) argued before the Michigan Senate Appropriations Subcommittee for Higher Education for increased funding of the state’s public universities in a way that increases their accountability to taxpayers. As universities face cuts in public funding, they must come up with ways to convince their state governments that they are valuable investments.

In most states, funding of higher education institutions is currently tied to enrollment. Performance-based funding would tie money received to the “performance” of those enrolled—namely, their timely graduation rates, among other metrics. Poor performance would mean that too many students are enrolling but not actually graduating to fill the jobs that require higher education degrees.

Business Leaders for Michigan is made up of senior executives and chairpersons from Michigan-based companies and universities responsible for 325,000 jobs and serving over 135,000 students.

According to the press release, President and CEO of BLM Doug Rothwell proposed that universities need to earn additional funding from the state by “progressing toward, meeting, or exceeding the performance of their top peers in other states.” Some of the performance metrics Rothwell mentioned were retention rates, administrative costs and graduation rates.

BLM board members are advocating performance-based education funding not because they want less funding for universities, but rather because they want more funding. Patrick Doyle, President and CEO of Domino’s Pizza and a BLM board member, said that higher education should be high on the state’s list of funding projects.

After citing the fact that 76 percent more money will be spent this year on prisons than universities in the state of Michigan, Doyle said, “This investment strategy is upside down if we want to attract business investment and good paying jobs,” according to the same press release. Performance-based funding would channel money to deserving schools, attracting students and workers to Michigan.

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